A health savings account (HSA) differs from a flexible spending account (FSA) in many ways. The big difference is that the money in a HSA is yours. You control how the money is spent and you keep any interest and investment earnings from the account. Unlike FSA contributions, you don’t lose the money in your HSA at the end of the year. You can keep saving your money in the HSA year after year even into retirement.

Anyone under age 65 can open a HSA if they are participating in an eligible high-deductible health plan (HDHP) that has a minimum deductible of $1,200 for individual and $2,400 for family coverage; these are the 2011 federal law requirements and may change each year. Review your plan options to find out how and if you are eligible to sign up for a HSA. You generally cannot have any other coverage other than a high-deductible health plan if you want to have a HSA. Click here for more information on eligibility. There are situations in which federal law will permit you to have additional coverage. To learn more about this coverage, visit IRS.gov, and your employer’s benefit information.

Advantages of a Health Savings Accounts

1. On average, you will pay lower premiums than with traditional health plan options.

2. You can get triple tax savings.*

The money you put in is tax deductible, up to the legal limit. In 2011, the contribution limit for an individual is $3,050, and the limit for a family is $6,150. If you are age 55 or older, you can contribute an additional $1,000 each year.

Your savings grow tax-free.

Any money you take out to pay for eligible medical expenses is income-tax free.

3. The money in your HSA is always yours. All amounts in your HSA belong to you, and unspent balances in accounts remain in your account until spent.

*State tax treatment of HSAs varies. Go to your state’s department of revenue to find out more